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Last year at NBAA-BACE, the analysts at JETNET cautioned that even with the backlogs of aircraft makers at record highs and climbing, that a fall would eventually come.
One year later, updating its forecast at business aviation's largest gathering in Las Vegas on Tuesday, JETNET shared its latest research, showing that year-old prediction starting to ring true. But that doesn't mean we're hearing funeral bells.The market for private jets remains robust, as the optimism of aircraft owners and operators about the economy has slowly recovered, according to JETNET iQ creator Rollie Vincent, and the outlook for the rest of 2023 and into 2024 is "generally good."However, work remains within the industry to create a sustainable future energy-wise, rebuild talent pipelines, improve the industry's image, and retool for next-gen customer requirements.
Vincent said that markets are stabilizing with preowned inventory levels rising. The backlogs among new aircraft makers remain in the 18-24 month range, with most of them drifting back toward a 1-to1 book-to-build ratio, aside from Embraer outpacing other manufacturers with a moderately higher ratio.
A slight majority of aircraft owners and operators surveyed recently by JETNET, 55%, believe we are past the low point in the economy.
Net optimism "has been in a bit of a funk the past few quarters," Vincent said, noting the general decline of the mood about the economy since the start of 2021.
"We finally see mood improvement in the U-S of A, thank goodness, right?" he asked rhetorically.
The other survey info showed many differences in sentiment within the business aviation industry compared to before the pandemic.
For instance, when owners and operators were asked in 2019 for the most likely factor to delay a purchase of a new aircraft, most said it was because they didn't need them. In 2023, it remained the top reason, but pricing has risen to be a close number-two answer.
Similarly, the number of those who said they would seriously consider flying with sustainable aviation fuel (SAF) in the next 24 months jumped from 30% to 50%.
One constant in the survey from year to year is what people would buy into for the best return on investment if they had $500 million, with the top answer being MROs.
However, there was a split among age groups, with those under 40 being the most likely to invest that money into a charter operation, while those over 40 preferred hybrid turbine engines.
JETNET Vice President of Sales Paul Cardarelli talked further about the rise of inventory on the market among preowned business aircraft, saying it has especially grown larger since April and is now above the 6% mark.
"If you are a broker, it is a better time for that first-time buyer because there is better inventory than a year ago," he said.
Vincent said that transaction volumes in preowned aircraft sales have dropped by a third this year, but he was uncertain what that will ultimately mean for aircraft prices.
Regarding larger economic forces, Vincent noted that the military action in Israel is driving oil prices higher, along with existing issues driven by the war in Ukraine, which has restricted the global supply of titanium, a key component in manufacturing new planes.
As warfare unfolds in Israel, he said "it could really change the calculus. … We'll have to see what happens in that part of the word, but it's not good."
However, in regard to a global recession, "we do not have it in our forecasts at all," he said.
Vincent did note that Germany, "the motor of Europe," is in a recession now and there is some worry that it could spread into a regional recession throughout the continent.
But economic downtown domestically is not as likely, Vincent predicted.
"The U.S. continues to power on," he said. "The jobs numbers continue to look good. We have an inflation problem but so does everyone else."
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